E-commerce

1. E-commerce business. technology. society. Fifth Edition Kenneth C. Laudon Carol Guercio Traver

2. The Revolution Is Just Beginning Copyright © 2007 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

3. MySpace and Facebook: It’s All About YouClass Discussion • What was the idea behind the creation of MySpace? • How is Facebook different from MySpace? • Have you used MySpace or Facebook, and if so, how often? What was your experience? • Do you think Facebook will overtake MySpace as the most popular social networking site in the United States? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

4. E-commerce Trends: 2008-2009 • New business models based on social technologies and user-generated content • Search engine marketing challenges traditional marketing • More and more people/businesses use Internet to conduct commerce • Broadband and wireless Internet access growing • Continued conflict over copyrights, content regulation, taxation, privacy, Internet fraud and abuse. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

5. What is E-commerce? • Involves digitally enabled commercial transactions between and among organizations and individuals • Digitally enabled transactions include all transactions mediated by digital technology • Commercial transactions involve the exchange of value across organizational or individual boundaries in return for products or services Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

6. E-commerce vs. E-business • E-business: • Digital enablement of transactions and processes within a firm, involving information systems under firm’s control • Does not include commercial transactions involving an exchange of value across organizational boundaries Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

7. Why Study E-commerce? • Technology is different and more powerful than other technologies • Has challenged much traditional business thinking • Has a number of unique features that help explain why we have so much interest in e-commerce Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

8. Unique Features of E-commerce Technology • Ubiquity • Global reach • Universal standards • Information richness • Interactivity • Information density • Personalization/customization • Social technology Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

9. Web 2.0 • The “new” Web • Applications and technologies that allow users to: • create, edit, and distribute content • share preferences, bookmarks, and online personas • participate in virtual lives • Build online communities • Examples • YouTube, Photobucket, Flickr • MySpace, Facebook, LinkedIn • Second Life • Wikipedia Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

10. Types of E-commerce • Classified by nature of market relationship • Business-to-Consumer (B2C) • Business-to-Business (B2B) • Consumer-to-Consumer (C2C) • Classified by type of technology used • Peer-to-Peer (P2P) • Mobile commerce (M-commerce) Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

11. The Internet • Worldwide network of computer networks built on common standards • Created in late 1960s • Services include the Web, e-mail, file transfers, etc. • Can measure growth by looking at number of Internet hosts with domain names Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

12. The Growth of the Internet, Measured by Number of Internet Hosts with Domain NamesFigure 1.3, Page 23 SOURCE: Internet Systems Consortium, Inc. , 2008. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

13. The Web • Most popular service on the Internet • Developed in early 1990s • Provides access to Web pages (HTML documents) • Can include text, graphics, animations, music, videos • Web content has grown exponentially, from around 2 billion Web pages in 2000 to around 40 - 50 billion today Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

14. The Growth of Web Content Figure 1.4, Page 24 SOURCE: Google Inc., 2008; authors’ estimates Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

15. Insight on Technology:Spider Webs, Bow Ties, Scale-Free Networks, and the Deep WebClass Discussion • What is the “small world” theory of the Web? • What is the significance of the “bow-tie” form of the Web? • Why does Barabasi call the Web a “scale-free network” with “very connected super nodes”? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

16. Origins and Growth of E-commerce • Precursors: • Baxter Healthcare • Electronic Data Interchange (EDI) • French Minitel (1980s videotext system) • None had functionality of Internet • 1995: Beginning of e-commerce • First sales of banner advertisements • Since then, e-commerce fastest growing form of commerce in U.S. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

17. The Growth of B2C E-commerceFigure 1.5, Page 25 SOURCES: eMarketer, Inc., 2008d; U.S. Census Bureau, 2008; authors’ estimates. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

18. The Growth of B2B E-commerceFigure 1.6, Page 28 SOURCES: U.S. Census Bureau, 2008; authors’ estimates. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

19. Technology and E-commerce in Perspective • The Internet and Web are just two of a long list of technologies, such as automobiles and radio, that have followed a similar historical path. • Although e-commerce has grown explosively, eventually its growth will cap as it confronts its own fundamental limitations. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

20. Potential Limitations on the Growth of B2C E-commerce • Expensive technology • Sophisticated skill set • Persistent cultural attraction of physical markets and traditional shopping experiences • Persistent global inequality limiting access to telephones and computers • Saturation and ceiling effects Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

21. The Visions and Forces Behind E-commerce: 1995–2000 • Computer scientists: Envisioned an inexpensive, universal communications and computing environment accessible by all • Economists: A nearly perfect competitive market and friction-free commerce • For entrepreneurs, financial backers and marketing professionals: An extraordinary opportunity to earn far above normal returns on investment Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

22. Insight on BusinessDot-com Déjà VuClass Discussion • What explains the rapid growth in private investment in e-commerce firms in the period 1998–2000? Was this investment irrational? • Why do you think investors today would be interested in investing in or purchasing e-commerce companies? Would you invest in an e-commerce company today? • What’s happening today? Go to the PricewaterhouseCoopers MoneyTree Web site for the latest information:http://www.pwcmoneytree.com/moneytree/index.jsp Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

23. Assessing E-commerce: Successes, Surprises and Failures • Stunning technological success • A mixed success from business perspective • Many early visions not fulfilled • Friction-free commerce • Consumers less price-sensitive than expected • Considerable price dispersion remains • Perfect competition • Transaction costs still high • Intermediaries remain Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

24. Predictions for the Future • E-commerce technology will continue to propagate through all commercial activity • E-commerce prices will rise to cover the real cost of doing business on the Web and pay investors reasonable rate of return • E-commerce margins and profits will rise to levels more typical of all retailers • Traditional Fortune 500 companies will play growing and dominant role • Number of successful pure online companies will decline; most successful e-commerce firms will adopt mixed “clicks and bricks” strategies • Growth of regulatory activity worldwide Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

25. Understanding E-commerce: Organizing Themes • Technology: • Development and mastery of digital computing and communications technology • Business: • New technologies present businesses with new ways of organizing production and transacting business • Society: • Intellectual property, individual privacy, public policy Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

26. The Internet and the Evolution of Corporate ComputingFigure 1.10, Page 44 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

27. Insight on SocietyHolding On to Your Privacy OnlineClass Discussion • What techniques of privacy invasion are described in the case? • Which of these techniques is the most privacy-invading? Why? • Is the Internet and e-commerce any different than traditional markets with respect to privacy? Don’t merchants always want to know their customer? • How do you protect your privacy on the Web? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall